Milestones in European Housing Finance

Jens Lunde, Department of Finance, Copenhagen Business School Jens Lunde has been Associate Professor in the Department of Finance at Copenhagen Business School since 1984. He previously taught in the Department of Economics at the University of Copenhagen and worked for the Danish Ministry of Housing and the Danish Building Research Institute. His main specialisms are in housing finance with a particular emphasis on the analysis of individual data. Christine Whitehead, Emeritus Professor in Housing Economics, Department of Economics, London School of Economics She works mainly in the fields of housing economics, finance and policy. She has worked with a wide range of international agencies as well as regularly for the UK government and parliament.

Notes on Contributors xv

Foreword by David Miles, Professor of Financial Economics, Imperial College, London xxi

Acknowledgements xxiii

1 Introduction: Milestones in European Housing Finance since 1989 1
Jens Lunde and Christine Whitehead

Why analyse developments in housing finance? 1

Defining housing finance 3

The countries 4

Trends in mortgage systems 5

Mortgage debt and house price increases – enabling each other? 7

Conclusions 13

References 14

2 European Housing Finance Models in 1989 and 2014 15
Jens Lunde and Christine Whitehead

Introduction 15

Mortgage systems 16

Funding the supply of mortgages 21

Mortgage characteristics 25

Overview 33

References 35

3 Australia’s 25 Years with a Deregulated Housing Finance System: Looking Back and Looking Forward 37
Judith Yates and María Belén Yanotti

The economic and institutional environment of the last 25 years 37

Key milestones 39

Impacts and implications of changes 43

Emerging issues 48

Conclusion 51

Acknowledgements 51

References 52

4 Milestones in Housing Finance in Austria over the Last 25 Years 55
Alexis Mundt and Elisabeth Springler

The economic and institutional environment of the last 25 years 55

Finance milestones 57

Impacts and outcomes 66

Looking to the future 70

Acknowledgements 71

References 71

5 Milestones in 25 Years of Housing Finance in Belgium 75
Sien Winters and Katleen Van den Broeck

Introduction 75

The Belgian housing finance system 76

The economic and institutional environment of the last 25 years in Belgium 76

Milestones during the last 25 years of housing finance in Belgium 77

Impacts 86

Looking to the future 88

Acknowledgements 89

References 89

6 Milestones in Housing Finance in the Czech Republic since 1990 93
Petr Sunega and Martin Lux

Introduction 93

Milestones in housing finance 95

Impacts 102

Future prospects 106

Acknowledgements 106

Notes 106

References 107

7 Milestones in Danish Housing Finance since 1990 109
Jens Lunde

Introduction 109

The economic environment of the last 25 years 110

The Danish mortgage system 111

Key milestones 113

The impacts of these milestones over the last 25 years 117

Parallel development in house prices and

owner‐occupiers’ net debt 118

The housing crisis, the national banking crisis and the Global Financial Crisis 121

The aftermath 123

The rescue operations 124

Looking to the future 124

Acknowledgements 125

References 126

8 Milestones in Housing Finance in England 127
Kathleen Scanlon and Henryk Adamczuk

Introduction 127

The economic and institutional environment of the last 25 years 128

Milestones in private housing finance 128

Milestones in social and affordable housing finance 136

Impacts 138

Looking to the future 142

Note 143

References 144

9 Milestones in Housing Finance in Finland 147
Timo Tähtinen and Tommi Laanti

Introduction 147

Key milestones 148

Impacts and implications of changes 154

Looking to the future 161

References 162

Further reading 162

10 Milestones of Housing Finance in France between 1988 and 2014: Is the French Credit System a Gallic Oddity? 165
Christian Tutin and Bernard Vorms

Introduction: A quarter of a century later 165

Finance milestones 166

Specifics of French housing finance 171

Impacts 175

Looking to the future 179

Conclusions 180

References 181

11 Milestones in the Development of the German Housing Finance System in the Last 25 Years 183
Stefan Kofner

The initial situation in 1989 183

Milestones at a glance 184

German reunification (1990): A friendly takeover by the white knight? 184

The conversion of homeownership subsidisation from a tax to a grant system (1996): Heading for a new balance of tenures? 186

Integration and deregulation of capital markets: risks for the future? 187

Trying to run a housing system without subsidies 190

Measures to rescue the financial system since 2008 191

The dynamics of the German system of housing finance since 1989 196

Notes 198

References 198

12 Moving from an Authoritarian State System to an Authoritarian Market System: Housing Finance Milestones in Hungary between 1979 and 2014 201
József Hegedüs and Eszter Somogyi

From socialism to capitalism: the economic and institutional environment 201

Finance milestones in the housing system 204 Impacts 214

The future of the housing finance system 216 References 217

13 Housing Finance in Iceland: Milestones 1989–2014 219
Lúðvík Elíasson and Magnús Árni Skúlason

Introduction 219

The economic and institutional environment of the past 25 years 220

The bumpy ride of Icelandic housing finance 221

Impacts 232

Looking to the future 235

References 237

14 Milestones in 25 Years of Housing Finance in Ireland 239
Padraic Kenna

Key milestones 239

Emerging issues 248

Conclusion 251

Acknowledgements 252

Notes 252

References 253

15 Milestones in Housing Finance in the Netherlands, 1988–2013 255
Marja Elsinga, Hugo Priemus and Peter Boelhouwer

Introduction 255

Milestones over the three periods 256

Impacts 265

Reflection 270

Acknowledgements 271

References 271

16 Housing Finance in Norway: The Last 25 Years 273
Rolf Barlindhaug

Introduction 273

The economic and institutional environment of the last 25 years 274

Finance milestones 275

The financial crisis 281

Impacts of the housing finance milestones 283

Looking into the future 286

Conclusion 287

Acknowledgements 288

References 288

17 Milestones of Housing Finance in Poland 291
Marta Widłak and Jacek Łaszek

Introduction 291

Housing finance milestones 292

Impact of housing finance milestones in Poland in the last 25 years 301

Looking towards the future 307

References 308

18 The Housing Finance System in Portugal since the 1980s 309
Romana Xerez and Jaime R. S. Fonseca

Introduction 309

Context: a legacy of family financing, the impact of the 1974 revolution and the period to 1989 310

Milestones in the development of the Portuguese housing market and housing finance since 1989 313

Impacts 319

Conclusions 321

Acknowledgements 323

References 323

19 Evolution of the Housing Finance System in Russia 325
Maria Plotnikova, Andrey Tumanov and Evgeniya Zhelezova

Introduction 325

Brief review of basic features of the Soviet era housing system 326

The housing system during the transition to a market economy (1990s) 328

Forming the basis for a housing mortgage financing system (1997–2005) 329

Between the market and the state (2005–2013) 333

State programmes to stimulate housing demand and supply 333

The effect of the GFC 335

What lies ahead? 337

References 339

20 Housing Finance in Slovenia: From a National Housing Fund to a Bank‐Driven System 341
Andreja Cirman and Richard Sendi

The economic and institutional environment of the last 25 years 341

Major policy changes 342

Impacts 353

Looking to the future 356

References 357

21 Housing Finance in Spain: From the Liberalisation of the Mortgage Market to Booms and Busts 359
Irene Peña and Baralides Alberdi

The economic and institutional environment of the last 25 years 359

Finance milestones 360

The impact of these milestones over the last 25 years 367

Looking to the future: financing into the future 372

References 374

22 Milestones in Swedish Housing Finance 375
Peter Englund

Background 375

Key milestones 378

Impacts 386

Looking to the future 389

References 390

23 Housing Finance in Turkey over the Last 25 Years: Good, Bad or Ugly? 393
Yener Coşkun

Introduction 393

The Turkish housing finance system over the last 25 years from a marketisation perspective 394

Finance milestones: The rise of marketisation and changes in housing finance 400

Impacts of the transformation of the housing finance system 402

Future trends in housing finance markets 405

Gated communities and housing finance 405

Conclusions 408

Acknowledgements 409

References 410

24 Milestones in EU Housing and Mortgage Markets 413
Jennifer Johnson, Lorenzo Isgrò and Sylvain Bouyon

Milestones in EU housing and mortgage markets 413

1990–2000 – Milestones: The Single European Market, deregulation and consolidation and product innovation 413

2001–2008 – Milestones: EU focus on mortgage credit, growth of covered bonds and adoption of the Capital Requirements Directive (CRD) 418

2008–2014 – Milestones: Restoring financial stability, consumer protection and unlocking long‐term financing 421

Conclusion 428

References 430

25 Following On From a Quarter of a Century of Mortgage Debt 433
Jens Lunde and Christine Whitehead

Introduction: 1989 and 2014 433

Trends in mortgage systems over the quarter century 436

The impact of the GFC 439

Conclusions: looking back and looking forward 443

References 446